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The Single Biggest Oil Price Influencer In 2018

Geopolitical concerns will replace the OPEC/non-OPEC production cuts as the main driver of oil prices this year, according to 67 percent of 100 Middle East energy industry executives polled by research firm Gulf Intelligence.

Just as the OPEC cuts started to have a tangible effect on global oil inventories, the geopolitical risk premium returned to the oil market last year, first with the fallout from Kurdistan’s referendum and Iraq’s response to it, which pushed oil prices up on concerns over supply outages from the region.

Then the Saudi government’s purge spooked the markets, as well as the heightened tension between Saudi Arabia and Iran. North Korea’s belligerence and Venezuela’s economic collapse and near-default are also some of the geopolitical risks to watch for in 2018.

This year, oil prices made their strongest start to a year in four years, with both Brent and WTI trading at the beginning of the year above $60 a barrel for the first time since January 2014, amid protests in Iran and uncertainties over whether more U.S. sanctions on Tehran are on the way.

According to the survey by Middle East-energy-focused Gulf Intelligence, the majority of executives, or 51 percent, see the average price of Brent crude oil this year in the $60s, followed by 22 percent who expect Brent to average in the $70s, 21 percent in the $50s, and 6 percent in the $40s or lower. Related: OPEC Won’t Compensate For ‘Small’ Supply Outages

The highest share of executives, 34 percent, expects OPEC/non-OPEC compliance to the cuts to average just 70 percent in 2018. A total of 32 percent see compliance at 80 percent, while 100-percent compliance is the prediction of just 12 percent of executives surveyed.

Asked whether they expect Saudi Aramco’s initial public offering to go ahead in 2018 as planned, 59 percent of executives responded ‘yes’, while 41 percent are skeptical about the Saudi oil giant managing to pull off what is expected to be the world’s biggest IPO before the end of the year.

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Geopolitical concerns inventory levels etc all rubbish... the single biggest indicator for oil prices is electric car uptake. Does anyone else notice that as soon as model 3 production is under question in the last few months, the oil price went up????